Microsoft touts strong cloud growth as profits hit $5.2bn

Microsoft has posted profits of $5.2bn for its 2017 fiscal second quarter, taken from revenues of just over $24bn.

Both figures marked incremental improvements on the same period last year of $5bn and $23bn respectively, although some units saw much stronger growth, most notable its Azure service, where revenues grew by 93 per cent.

Microsoft CEO Satya Nadella was keen to tout this success, no doubt as it helps prove his ‘mobile-first, cloud-first’ strategy is working.

“Our customers are seeing greater value and opportunity as we partner with them through their digital transformation,” he said.

“Accelerating advancements in AI across our platforms and services will provide further opportunity to drive growth in the Microsoft Cloud.”

Overall this growth helped the Intelligence Cloud unit within Microsoft grow by eight per cent, to just shy of $7bn with server products and cloud services growing 12 per cent within this unit.

The biggest growth came in the firm’s Productivity and Business Processes unit, though, which grew 10 per cent to post revenues of $7.4bn, with strong increases in revenues from its Office products, particularly in the cloud with its Office 365 suite.

This revenue also includes those from its recently completed acquisition of LinekdIn, which Microsoft said added revenues of $228m and an overall income of $100m.

However, other units did not fare as well. Notable, the Personal Computing division fell by five per cent to $11.8bn in revenues, although this still means it is the biggest revenue stream in the business.

Microsoft may well hope for a bump in this unit in future quarters now that upgrades to Windows 10 are not free, and many more commercial organisations may well start their upgrades from Windows 7, or even old, to the new OS.

Microsoft’s financials came on the same day as Google’s financials that also showed cloud growth, but this was only about half of Microsoft’s and also included sales from its Pixel hardware, suggesting Microsoft has a comfortable lead in the cloud market.